updated 01:30 am EST, Wed February 27, 2013
January drop, if true, is steep even for traditional slow period
According to a report from the mixed-accuracy Taiwanese trade paper DigiTimes, one of Apple's suppliers for 9.7-inch iPad displays saw a 90 percent drop in production from December to January. Orders for full-size displays went from six million units to 600,000, a figure that is seen as exceptionally low even for the traditionally slower calendar second quarter. Blame for the dramatic drop is attributed by the paper to ongoing and growing popularity of the iPad mini, which accounted for the majority of the five million displays LG shipped to Apple.
Another factor playing a role is the slight increase in demand for low-priced Android tablets, the report said, though there has been little sign of any real threat to Apple in this area as compared to smartphones. The drop in Apple orders had a significant effect on LG, but the company will likely increase its display output for iPads again later in the year if and when a next-generation iPad model is revealed.
Analysts have previously said that they expect that the iPad mini will comprise a majority of iPad shipments in 2013, potentially as high as 65-70 percent. The full-size iPad, though continuing to be popular with consumers, is now seen as heavier and thicker than desired given the design achievements of the significantly thinner and lighter iPad mini (which on an operational basis is more like a miniaturized iPad 3 and does not offer all the performance of the fourth-generation iPad).
The report may well have exaggerated the actual figures, but it is not unexpected for Apple to reduce orders following the holiday season. In addition, some rumors have speculated on the possibility that Apple will rush-release the next iPad revisions as early as late spring -- though there is no firm evidence of this beyond redesigned "iPad 5" case designs. Such case prototypes have been shown to not always be a reliable indicator of the actual future product.
The paper claims that 3.5 to four million of the current displays made by LG per month now are destined for the iPad mini, which suggests that a "Retina" upgrade of the model may not appear as early as some reports would have it. It is widely expected that the next iPad mini would bump up the resolution of its display, which currently matches the 1024x768 resolution of the iPad 2.
The numbers, if accurate, would suggest that Apple may sell as many as 11-12 million iPad minis alone in its fiscal second quarter, a softer-than-expected drop from the holiday quarter, particularly if 9.7-inch iPad sales maintain normal levels for the quarter. It is also possible that the severity of the drop could be explained by Apple over-producing full-size iPad units to help meet holiday demand, creating an excess of post-Christmas in-channel inventory that needs to be sold before "normal" production levels can be resumed.